In 1995, research by United Nations Environment Programme and Salomon Inc. of New York found that 70% of respondents in a group of 90 commercial and investment banks from four different continents believed environmental issues had a material impact on their business. In particular bankers are cautious about the financial implications related to the following:

Lender's liability

Lender's liability is associated with the financial risks banks face when granting or extending loans. Banks and other lenders rely on financial statements of companies when deciding whether to grant or extend credit. They need to be fully and accurately informed about decommissioning liabilities in order to avoid unacceptably high financial risks. Under current reporting requirements, potential environmental liabilities can easily remain undiscovered unless a lender develops its own procedure to assess the environmental risks. Therefore, some banks can end up spending the money on clean-ups of sites contaminated through their clients' activities.

Borrower's ability to meet financial obligations

The borrower's obligation to clean up contaminated sites might impair his or her ability to repay a loan. The contamination might also reduce the value of the collateral. Prudent lenders are following the environmental trends and changes in regulatory framework to assess the possible implications of these changes on their clients' overall financial position.

Growing environmental concerns

The last few decades have been marked by numerous changes in the regulatory framework relating to environmental protection. Recent scientific discoveries of environmental and health risks associated with pollution have contributed to an increase in public demand for environmental quality. These growing concerns have contributed to a major shift in public perception of corporate roles in society. Influenced by these trends, some banks have begun looking closely into their own environmental and social performance. In many cases this effort has resulted in adoption of energy and resource efficiency programs within the institutions themselves.

Business opportunities

The traditional approach of the banking sector to sustainability is often regarded as reactive and defensive. However, several international banks have recently adopted innovative, proactive strategies to capture the opportunities associated with sustainability. They have developed new products such as ethical funds or loans specifically designed for environmental businesses to capture new market opportunities associated with sustainability.